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2019 MDRT Global Conference e-Handout Material Title: Psychonomics of Retirement:

Redefining What You Have Learned Speaker: Tom D. Hegna, CLU, ChFC Presentation Date: Wednesday: September 4, 2019 Presentation Time: 10:00a.m. - 11:00a.m. Session Room: ICC - Grand Ballroom B2 The Million Dollar Round Table® (MDRT) does not guarantee the accuracy of tax and legal matters and is not liable for errors and omissions. You are urged to check with tax and legal professionals in your state, province or country. MDRT also suggests you consult local insurance and security regulations and your company’s compliance department pertaining to the use of any new sales materials with your clients. The information contained in this handout is unedited; errors, omissions and misspellings may exist. Content may be altered during the delivery of this presentation.

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Psychonomics of Retirement: Redefining What You Have Learned

Tom Hegna, CLU, CHFC,

CASL

When EVERY DAY

is Saturday!

RETIREMENT

7 STEPS TO RETIREMENT SECURITY

1. Have a PLAN for Retirement2. Maximize Governement Benefits3. Consider a Hybrid Retirement4. Protect your Savings from Inflation5. Secure More Retirement Income6. Have a Plan for Long Term Care7. Use your Home Equity Wisely

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Facts Based on Math and Science

From the TOP PhD’s and Economists from around the

world.

Unfortunately, most people don’t base their

retirements on math and science. They watch TV

and talk to their friends….

When to Buy Long-Term Care Insurance?Dave suggests waiting until age 60 to buy long-term care insurance because the likelihood of you filing a claim before that age is slim. Statistically, 89% of LTC claims are filed for people over age 70.(6)

You may assume that you’ll pay less if you buy your policy at age 50 and lock in a lower monthly premium instead of waiting until age 60 as Dave recommends. But Dave will never tell you to buy something based on how much the monthly payment is. That’s what broke people do, right?

MISINFORMATION IS OUT THERE

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So, many people have been Pyschonomicallyprogrammed to have a suboptimal retirement.

“You will never be happy in retirement if you are constantly worried about your assets, the markets, and interest rates. Happiness requires that turn a portion of your assets into Guaranteed Lifetime Income! This income gives you the license spend your money and enjoy retirement.”

“The odds of your home burning down are less than 3% - but everyone has homeowners insurance. The odds of totaling your car during your lifetime is 18% - but you have auto insurance. The odds you needing some form of Long-Term Care is 72% - yet you have no retirement plan for that. No retirement plan is complete without a plan for Long-Term Care.”

“Here is the ultimate truth about life insurance: The ONLY policy that matters is the one in force on the day you die! Less than 2% of Term Policies ever pay a death claim. That doest mean that term is bad, it just means that Term should NEVER be your ONLY policy.”

OK, so those are the problems, what are the

SOLUTIONS?

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HAVE A PLAN AND WORK WITH A FINANCIAL PROFESSIONAL

1. What do I NEED my retirement income to do?

2. What do I WANT my retirement income to do?

TWO KEY QUESTIONS

IN RETIREMENT, YOU MAY WANT TO…

Join the Country Club

Buy a Boat

See the World

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Don’t live a

“just in case”

Retirement!

MAXIMIZE GOVERNMENT BENEFITS

DIFFERENCE IN BENEFIT AMOUNTSMonthly Benefit Amounts Differ Based on the Age You Decide to Start Receiving Benefits.

AGE YOU CHOOSE TO START RECEIVING BENEFITS

$750 $800 $866

$933 $1,000

$1,080 $1,160

$1,240$1,320

$0

$300

$600

$900

$1,200

$1,500

62 63 64 65 66 67 68 69 70

MO

NTH

LY B

ENEF

IT A

MO

UN

T

This example assumes a benefit of $1,000 at a full retirement age of 66

Source: Social Security Administration

FRA

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DIFFERENCE IN BENEFIT AMOUNTS

Monthly Benefit Amounts Differ Based on the Age You Decide to Start Receiving Benefits

$750

$1,320

$0

$300

$600

$900

$1,200

$1,500

62 63 64 65 66 67 68 69 70

This example assumes a benefit of $1,000 at a full retirement age of 66

AGE YOU CHOOSE TO START RECEIVING BENEFITS

MO

NTH

LY B

ENEF

IT A

MO

UN

T

Source: Social Security Administration

RUN THE NUMBERS

We can run a detailed calculation in our

one-on-one meeting

GOVERNMENT BENEFIT CALCULATORS

WORK A LITTLE LONGER,

SAVE A LITTLE MORE

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BENEFITS OF A HYBRID RETIREMENT

• Increased earnings

• Increased savings

• Increased Social Security benefits

Retirement Savings Mind Blower: Working 6

Months Longer Makes a Big Difference

By Jane Wollman Rusoff

October 2018

“There’s no saving you could possibly do that would affect your

retirement resources as dramatically. You can change your

savings rate from 6% to 26%, and it still wouldn’t have as much power

as working a few extra years. And if you save 1% more for your final 10

years of work, that would be equivalent to working about one

month longer.”

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

PROTECT YOUR SAVINGSFROM INFLATION

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RETIREMENT INCOME CONCERNS - INFLATION

Years From Now

0% 1% 2% 4% 6% 8% 10%

1 $10,000 $9,901 $9,804 $9,615 $9,434 $9,259 $9,091

5 $10,000 $9,515 $9,057 $8,219 $7,473 $6,806 $6,209

10 $10,000 $9,053 $8,203 $6,756 $5,584 $4,632 $3,855

15 $10,000 $8,613 $7,430 $5,553 $4,173 $3,152 $2,394

20 $10,000 $8,195 $6,730 $4,564 $3,118 $2,145 $1,486

25 $10,000 $7,798 $6,095 $3,751 $2,330 $1,460 $923

30 $10,000 $7,419 $5,521 $3,083 $1,741 $994 $573

35 $10,000 $7,059 $5,000 $2,534 $1,301 $676 $356

Hypothetical Inflation Rate

SECURE MOREGUARANTEED INCOME

Securing at least a base level of

lifetime income should be every

retiree’s priority - at least if they

want to live happily ever after.

Source: TIME magazine - Lifetime Income Stream Key to Retirement Happiness, July 2012

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RETIREMENT INCOME

Sources of Guaranteed Income During Retirement

PENSIONS

ANNUITIES

GOVERNMENT BENEFITSGuaranteed

Income

THE SUCCESS OF YOUR RETIREMENT IS REALLY NOT ABOUT YOUR ASSETS…

Assets can be lost, stolen,

swindled, sued, divorcedor decimated in a

market crash.

1. How much Guaranteed Lifetime Income do you have?

2. Have you taken the Key Retirement Risks off the table?

SUCCESS REALLY DEPENDS ON THE ANSWERS TO THESE TWO QUESTIONS

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Longevity Risk

Deflation Risk

Market Risk

Withdrawal Rate Risk

Sequence of Returns Risk

WHY DO YOU NEED TO SECURE GUARANTEED INCOME?

Long Term Care Risk

Mortality Risk (Death)

Inflation Risk

Regulatory Risk

Taxation Risk

SO WHICH RISK IS #1?

Why? Because it is NOT just a Risk. It is a RISK MULTIPLIER of the other Risks!

Sequence of Returns Risk

Longevity Risk is HANDS DOWN the #1 Risk in Retirement!

HOW DO YOU TAKE LONGEVITY RISK OFF THE TABLE?

Traditional Investments such as Stocks, Mutual

Funds, Managed Money, Real Estate, and CD’s

CANNOT

Do It!

An Annuity with guaranteed lifetime

income CAN Do It!

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WHAT IS A LIFETIME INCOME ANNUITY?

A personal “pension-like”

stream of guaranteed

lifetime income from a

financial institution.

A GUARANTEED

Paycheck for Life!

©2016 Adult Financial Education Services

WE’VE TALKED ABOUT MATH, SCIENCE AND ECONOMICS, NOW LET ME TALK ABOUT PSYCHONOMICS

You got something from

your company every 2

weeks. What was that

called?

A Paycheck!

©2016 Adult Financial Education Services

PSYCHONOMICS OF RETIREMENT

What did you do with

most of that paycheck?

You SPENT it!

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©2016 Adult Financial Education Services

PSYCHONOMICS OF RETIREMENT

When was the last time you

raided your retirement savings,

or bank account, or brokerage

account?

Oh we CAN’T do THAT! We

have to save it, grow it,

protect it, don’t TOUCH it!

See, you have been Pyschonomicallyprogrammed to NOT TOUCH your assets!

Many of your friends will go to their graves NEVER touching their assets!

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Age

Pay

ou

t

…but only an insurancemortality pool.

Lifetime income annuities deliver higher payouts because, in addition to distributing gains and principal, they subsidize those who die late with the capital of those who die early.

Investment Growth Return of Principal Longevity Credits

Investment Advisors Can Manufacture This

Payout…

…but only a life insurance company can manufacture longevity credits

COMPONENTS OF LIFETIME INCOME PAYOUT

Components of Lifetime Income Payout

Male age 65, $100,000 investment

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HAPPY FACTOR

The Secret to a Happier Retirement

By Jonathon Clements

July 27, 2005

Strategies outlined in a new study could sharply lengthen the amount of time a nest

egg survives in retirement.

The study, soon to be released by the University of Pennsylvania's Wharton

Financial Institutions Center, finds that so-called income annuities can assure retirees of an income stream for life at a cost as much as

40% less than a traditional stock, bond and cash mix.

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

Securing at least a base level of

lifetime income should be every

retiree’s priority—at least if they

want to live happily ever after.

Lifetime Income Stream Key to

Retirement Happiness

By Dan Kadlec

July 30, 2012

A new study in a land of grumps reveals that retirees with a guaranteed lifetime income stream can find true happiness.

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

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Annuities and Retirement Happiness

By Steve Nyce and Billie Jean Quade

September 2012

Retirement satisfaction has steadily declined over the last decade.

Satisfaction is highest among those with high levels of wealth and income who are very healthy and annuitize their income.

Among retirees with similar wealth and health characteristics, those with annuitized incomes are happiest.

Annuities provide the biggest satisfaction boost to retirees with less wealth and

those in poor health

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

How to Live Longer

By Stephen Dubner

January 2013

“Research shows that people who buy annuities tend to live longer –and not just because they are the

kind of people that have the money to buy annuities to start with. It’s

apparently that little extra incentive of the annuity payout that keeps

people going.”

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

Annuities and Moral Hazard: Can Longevity

Insurance Increase Longevity?

By Patrick C. Tricker, JD, MSF

July 2018

“In the United States, a 65 year old male who purchases a life annuity can expect to live about 20 percent longer than a 65 year old male who does

not.”

- Journal of Financial Service Professionals

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

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Sense and Sensibility

By Jane Austen

1811

INVESTMENT SOLUTIONS | WHAT OTHERS ARE SAYING

“If you observe, people always live forever when there is an annuity to be paid to them…

The annuity is a very serious business; it comes over and over every year, and there is no getting rid of it.”

Volume I, Chapter II

PLAN FOR LONG TERMMEDICAL COSTS

THE 3 PHASES OF RETIREMENT

Early years with active lifestyle spent golfing, playing tennis, traveling, etc.

GO-GO YEARSSLOW-GO

YEARS NO-GO YEARS

More passive stage in which you decide

to let the pace of your lives slow

down.

Failing health makes medical treatment

and nursing care the defining

characteristics.

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USE YOUR HOME

EQUITY WISELY

USE YOUR HOME EQUITY WISELY

• Sell the home and downsize

• Take a loan against the equity

• A reverse mortgage

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7 STEPS TO RETIREMENT SECURITY

1. Have a PLAN2. Work a little longer, save a little more3. Cover your Basic Expenses with Guaranteed Lifetime Income 4. Optimize the rest of your saving toprotect from Inflation5. Maximize Your Governemnt Benefits6. Have a Plan for Long Term Care7. Use your Home Equity Wisely

And Use LIFE INSURANCEto Transfer Wealth